County Steals Woman's Home Equity

In Hennepin County, Minnesota, 80-year-old Geraldine Tyler fell $2,300 behind in paying her property taxes and an added $13,000 in interest, penalties, and assorted fees. Tyler couldn't afford to pay the accumulated amount. So, the County auctioned off her condo and got $40,000 for it. They did not return the excess over the amount debt owed to the county by Tyler. She is sued for the return of her remaining equity from that sale. This suit has now reached the US Supreme Court.

Neal Katyal, the attorney representing Hennepin County, justified keeping the residual amount after deducting the tax debt, saying that "historically, the authority to keep everything dates back to 1278 when the English Parliament's Statute of Gloucester ruled that when a vassal fails to provide enough wheat to his lord his lands escheat to the lord. Further, the US Court of Appeals for the 8th Circuit Judge Steven Colloton ruled that in the absence of a state law explicitly recognizing the property interest in surplus proceeds from a tax foreclosure-sale, the government is free to take as much of the debtor's money as it wishes."

Christina Martin, the attorney representing Tyler, countered with "the county could have collected the debt without violating the Constitution by following the traditional common law rule still followed in most states and still followed in Minnesota in nearly every other debt collection circumstance by taking the property, selling it, paying the debts from the proceeds, and refunding the remainder to Ms. Tyler."

While Justices Elena Kagan, Paul Gorsuch, Clarence Thomas, and Amy Coney Barrett all questioned the justice of confiscating the remaining equity of the debtor, Katyal warned that "reversing the previous judicial rulings in this case could seriously imperil the fiscal soundness of the state and local governments that depend on the profits from seized properties."